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China: Is peak coal part of its problem?

China: Is peak coal part of its problem?

If we look at China’s coal production and consumption in BP’s 2016 Statistical Review of World Energy (SRWE), this is what we see:

Figure 1. China's production and consumption of coal based on BP 2016 SRWE.

Figure 1. China’s production and consumption of coal based on BP 2016 SRWE.

Figure 2 shows that the quantities of other fuels are increasing in a pattern similar to past patterns. None of them is large enough to make a real difference in offsetting the loss of coal consumption. Renewables (really “other renewables”) include wind, solar, geothermal, and wood burned to produce electricity. This category is still tiny in comparison to coal.

Figure 2. China's energy consumption by fuel, based on BP 2016 SRWE.

Figure 2. China’s energy consumption by fuel, based on BP 2016 SRWE.

Why would a country selectively decide to slow down the growth of the fuel that has made its current “boom” possible? Coal is generally cheaper than other fuels. The fact that China has a lot of low-cost coal, and can use it together with its cheap labor, has allowed China to manufacture goods very inexpensively, and thus be very competitive in world markets.

In my view, China really had no choice regarding the cutback in coal production–market forces were pushing for less production of goods, and this was playing out as lower commodity prices of many types, including coal, oil, and natural gas, plus many types of metals.

China is mostly self-sufficient in coal production, but it is a major importer of natural gas and oil. Lower oil and natural gas prices made imported fuels of these types more affordable, and thus encouraged more importing of these products.

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This Is Why The U.S May Actually Not Be The No.1 Oil Producer

This Is Why The U.S May Actually Not Be The No.1 Oil Producer

According to the recently-released BP (NYSE: BP) Statistical Review of World Energy 2014, the U.S. was the world’s largest and most diverse energy producer in 2014. The Statistical Review ranked the U.S.:

#1 in oil production
#1 in natural gas production
#1 in nuclear power
#1 in wind power
#1 in geothermal power
#1 in biofuels
#2 in coal production
#4 in hydropower
#5 in solar power

The U.S. is clearly an energy production superpower, but we are an even greater energy consumer. Thus, despite the large amount of energy production, the U.S. is not energy independent. Our position as the #2 coal producer behind China (not coincidentally) mirrors our #2 position behind China in carbon dioxide emissions. And despite the rapid growth of renewable energy in both countries, carbon dioxide emissions in both countries rose to new record highs in 2014.

Related: This Is Why Californians Pay More For Their Gasoline?

Perhaps the most surprising item from this year’s BP Statistical Review was that the U.S. jumped over Russia and Saudi Arabia to regain the crown it had held decades ago as the world’s top oil producer. The Statistical Review reported that U.S. oil production was 11.6 million barrels per day (bpd) in 2014 – nearly 1.6 million bpd higher than in 2013 for the largest one-year gain in U.S. history. This compared to 11.5 million bpd of oil production for Saudi Arabia and 10.8 million bpd for Russia:

(Click to enlarge)

However, some have disputed this new ranking and argue that it is merely a function of the way the BP Statistical Review defines oil. “Oil” in the BP Statistical Review is defined as “crude oil, tight oil, oil sands and natural gas liquids”, but excludes biofuels and liquid fuels produced from coal or natural gas. Oil consumption numbers do include all liquid fuels, so as a result reported consumption numbers are always greater than reported production numbers.

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